The Economics of Macron before Macron

One can’t be too sure, but hazarding a guess, I’d say the French President’s labour market reforms date from 1994.

1994 was a long time ago…This is the year when the cyclist Francesco Moser beat the Hour world record (for the second time), Pinochet was still chief of the army in Chile, the leader of the group Nirvana Kurt Cobain killed himself, and it was the beginning of the Rwandan genocide.

1994 was also the year of publication of an immortal text, the OECD Jobs Study. A beautiful text, written by highly paid officials who sincerely wrote (this is the tragedy) that the minimum wage was bad for jobs, that technological change and globalization were as inescapable as Christmas on December 25 and maybe even more, that labour protections were the enemy of employment, that the reduction of working time was idiocy (except of course in the form of part-time work for women), and that it was necessary to accept the idea that new jobs in the new economy will be, well, rotten.

Their ideas were to be put into practice. The flexibility of the labour market has been a constant in recent decades, often advocated by “left” economists (rendering right-wing economists useless).

But in 2006, a dramatic u-turn. Showing a rare intellectual honesty, the OECD re-evaluated its strategy to find that things are not as simple as they thought. The effect of the minimum wage on employment? Undetectable. High unemployment benefits harmful to employment? Not certain at all, if the unemployed are well supported.

Far from the – neo-liberal – model advocated in 1994, the OECD was forced to note that two groups of countries are distinguished by high levels of employment.

First, the Anglo-Saxon countries, where the fall in unemployment has come at the cost of an explosion of inequality and a terrifying rise in poverty.

Then there are the Scandinavian countries, “characterized by extensive recourse to collective bargaining and social dialogue as well as generous social benefits” and where “employment levels are high and income disparities are low”.

Would not the latter be slightly preferable to the former? Not according to the OECD.

And why ? Because these countries stand out for their “significant budgetary costs.” And that’s the sum of it. Who would want to pay higher taxes, even if it allows one to finance quality public sector jobs and to finance generous welfare social and to fight effectively against unemployment?

In any case, the young and dashing Emmanuel Macron doesn’t know any of this. This is not his fault: he did his studies at the elite École nationale d’administration from 2002 to 2004, before the revision of the 2006 OECD Strategy.

In short, our young President, who is not yet 40, rules with earlier ideas that date back to the time when war was raging in Yugoslavia and the USSR had only disappeared three years earlier …